KPMG report backs better rural broadband funding

Government should give at least as much support per head of population to rural broadband as it is giving to the improvement of broadband networks in urban areas, says a report by consultancy KPMG.

Rapid acceleration in the capacity of broadband communications is essential to improving the productivity of the agricultural sector against mounting overseas competition, KPMG says in its inaugural Agribusiness Agenda report.

“The broadband initiatives should not be about being able to download movies faster or having fibre pass a higher percentage of front doors than any other country in the OECD but must be about creating wealth for the country,” KPMG says.

The funding initially earmarked for the rural sector’s broadband development was inadequate, it suggests: “The productive capacity of the New Zealand economy is increasingly focused in rural communities, yet only 1.6 percent of the new money the government initially proposed to put into broadband and fibre networks was targeted towards the 13.8 percent of the population that live in rural communities … that between them grow, process and export 66 percent of New Zealand’s merchandise exports.”

The Rural Broadband Initiative, announced in September last year, brought funding in the sector up to $300 million, but this is not “new money”, KPMG notes; it is to be found largely by reforming the Telecommunications Service Obligation (TSO).

Ross Buckley, KPMG agribusiness chairman and co-author of the report, says this way of sourcing funds creates some uncertainty and the reduced income for Telecom from the change may create pressure elsewhere in the network; but he acknowledges TSO reform is a complex matter that he did not explore in detail.

The KPMG report was based on conversations with 35 “influential” people, comprising senior executives from private-sector companies in agriculture or associated industries and government agencies. It came under fire recently for an apparently sympathetic attitude to intensive animal farming, referring to the likelihood that moves towards such farming overseas will put New Zealand agriculture under severe competitive pressure.

Attempts to get approval for cubicle farms in the Mackenzie basin highlighted shortcomings in the Resource Management Act says the report. It adds, however, that most of the people KPMG consulted believed the application should not have been approved.

Buckley says the New Zealand agriculture sector’s “clean and green” image is important and information technology can be an aid in reconciling that with greater productivity.

The report refers specifically to the National Animal Identification and Tracing (NAIT) project as important in moderating the effect of a future biosecurity emergency and quickly restoring confidence in New Zealand produce.

Such schemes have been put in place already in several of New Zealand’s major markets and countries with competing meat and dairy industries, KPMG says.

“International developments around animal traceability suggest that New Zealand will be out on a limb, if a national animal identification scheme is not implemented in the short to medium term.”

Current plans are for cattle farmers to begin using NAIT in October next year. The scheme has, however, been criticised for its use of older low-frequency RFID tags rather than ultra-high-frequency tags.

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